There’s a growing sense among Republican leaders in Congress that they need to be cautious about repealing and replacing Obamacare in order to avoid causing unintended havoc in the health insurance market. Tennessee’s Lamar Alexander, who heads the key Senate Committee on Health, Education, Labor, and Pensions, has argued, for instance, that lawmakers should only do away with the Affordable Care Act once there is a new set of “concrete, practicable reforms in place” to supplant it.
Donald Trump, though? Our new president isn’t so into caution. Right now, he appears to be debating a move that could dynamite the foundations of the whole individual market.
This story began to unfold Friday evening, when Trump issued an executive order instructing agencies to roll back bits of Obamacare wherever possible. It told regulators to “waive, defer, grant exemptions from, or delay” provisions of the legislation to the “maximum extent permitted by law.” Practically speaking, it didn’t do a lot; the document merely made it formal administration policy to enforce the rules using a light touch. But some industry experts worried that, by signaling his intentions to dismantle the Affordable Care Act administratively, Trump had tossed a “bomb” of uncertainty into the already-wobbly individual insurance market that could frighten away carriers.
Turns out, they were right to be concerned. On Sunday, presidential adviser Kellyanne Conway said that Trump might stop forcing Americans to either buy insurance or pay a tax penalty, as required under Obamacare’s individual mandate. Per Bloomberg:
“What President Trump is doing is, he wants to get rid of that Obamacare penalty almost immediately, because that is something that is really strangling a lot of Americans, to have to pay a penalty for not buying government-run health insurance,” Conway, whose title is counselor to the president, said Sunday on ABC News’s “This Week”
When host George Stephanopoulos asked her if Trump would “stop enforcing that mandate,” Conway responded: “He may.”
It is hard to overstate how destructive this decision could be. The individual mandate is Obamacare’s keystone—that’s why conservatives challenged its constitutionality all the way to the Supreme Court when they were trying to kill health reform via judicial fiat. The rule is designed to make enough healthy Americans buy coverage so that carriers can still make a profit while paying claims on the older, sicker, more expensive patients they’re required to insure under the legislation. It’s not clear exactly how effective the mandate has been up to this point, but without it, Obamacare’s markets would likely fall into complete disarray. A recent Congressional Budget Office report suggested that killing the rule without undoing the ACA’s other regulations would leave millions uninsured, send premiums rocketing an additional 20 to 25 percent, and cause insurers to flee the market.
It is unclear how far Trump could curtail the individual mandate without Congress’ help. But regulators can already grant exemptions to it in cases where paying for insurance would cause someone significant hardship. The rule is designed to be flexible, so the new administration could choose to give out relief more generously. Over time, it could also water down the rule by rewriting it.
But the technical issues of how Trump might try to undermine the mandate may be less important than the basic yes-or-no question of whether he intends to kill it. If the answer is yes, then we might see a mass exodus of insurers from the market hoping to get out before things truly get ugly.
It’s a little hard to fathom why Trump would go that route. After all, this is the same president who tweet-stormed (sigh) about how Republicans needed to be careful and let Democrats “own” Obamacare’s failures, rather than rush in and start wrecking things themselves. Did he change his mind? Does he not realize what killing the mandate might do? Is he trying to prod Republicans to agree on a replacement plan quickly by threatening to do something rash in the meantime? Does he just think deep-sixing the ever-unpopular mandate is good politics? That I don’t know. But Trump has his hand on the detonator. He might just press it because he can.